A partnership making an operating distribution will recognize gain or loss only when the partner that receives the distribution recognizes gain or loss.

Question

Quizplus · Accepted Answer

A partnership itself does not recognize gain or loss on the distribution of property to a partner. Gain or loss is recognized by the partner receiving the distribution, depending on the circumstances of the distribution and the basis of the property received compared to the partner's basis in the partnership.

A Partnership Making an Operating Distribution Will Recognize Gain or Loss